Texas Life Agent Exam: Mixed Practice Questions

Riley owns a policy on Riley’s parent, who is the insured. Riley’s sibling is the revocable primary beneficiary, and Riley’s child is contingent. Riley asks the insurer to change the primary beneficiary to a charity using the contract’s required written form. Which statement is best?

1. The insured parent must become the owner before any beneficiary change can be made.
2. The sibling’s consent is required because a primary beneficiary has priority over a contingent beneficiary.
3. Riley, as owner, may request the change under the stated procedure because the designation is revocable.
4. The child becomes owner because a contingent beneficiary controls changes while the primary beneficiary is alive.

An applicant pays the first premium with an application. The agent gives a conditional receipt that says coverage begins only if the applicant satisfies the insurer’s stated insurability condition as of the date of application. The insurer later determines that the applicant did not satisfy that condition. Which conclusion is best?

1. Coverage automatically began when the agent accepted the premium, regardless of the receipt’s condition.
2. The receipt’s stated condition matters; payment alone does not establish that temporary coverage attached.
3. The insurer must issue the policy because an application and premium were submitted together.
4. The beneficiary decides whether the condition was satisfied.

An insurer approves an application and sends a policy to the agent. Before delivery, the applicant is hospitalized. The policy requires a statement that health has not changed before delivery with the initial premium. What should the agent do?

1. Deliver the policy and avoid mentioning the hospitalization because underwriting is complete.
2. Have the applicant sign the unchanged-health statement anyway so the policy can take effect.
3. Follow the insurer’s instructions and report the material change; do not treat delivery as a formality that overrides the stated condition.
4. Change the beneficiary to the agent until the insurer reviews the hospitalization.

A Texas applicant plans to use value from an existing life policy to buy a new policy. The agent says the old contract should be surrendered after the new application is approved. Which approach best fits a replacement question?

1. Treat the transaction as a replacement and follow the required notices and documentation process; approval alone does not make the old policy irrelevant.
2. Ignore replacement requirements because the new insurer is different from the old insurer.
3. Cancel the existing policy before submitting the new application so the new policy is guaranteed to issue.
4. Describe the transaction only as a premium change because the applicant will use existing policy value.

An employee leaves a job and asks whether the employer’s group life master policy automatically becomes an individual policy. The group contract provides a conversion privilege after qualifying termination of coverage, subject to its terms and required timing. Which answer is best?

1. The employee already owns the employer’s master contract and can keep it unchanged.
2. The employee may have a conversion right to an individual policy under the contract and applicable rules, but must follow the process and deadline.
3. Conversion is automatic and requires no election or premium payment.
4. Only the employer may ever receive life insurance proceeds under group coverage.

A borrower buys credit life insurance tied to a covered loan. The borrower pays the loan off early. The premium was calculated for the original loan term, and the governing coverage provides for a refund of unearned premium when the debt ends before that term. Which statement is best?

1. The borrower should ask about the applicable unearned-premium refund; the life coverage does not continue as an unrelated full-face personal policy after the covered debt ends.
2. The lender must pay the borrower the original loan amount as a life benefit immediately.
3. The early payoff makes the borrower the beneficiary of every premium paid, regardless of the contract.
4. Credit life coverage always continues for the original term after the debt has been paid.

A consumer asks about replacing an existing annuity with a new one. The proposed contract has a surrender period and a different income feature. Before recommending it, the agent should primarily:

1. Compare only the illustrated first-year interest rate because it determines the consumer’s total outcome.
2. Gather and consider the consumer information required for the recommendation, compare relevant features and costs, and explain material trade-offs under applicable Texas rules.
3. Recommend the replacement if the consumer says the new contract sounds more modern.
4. Ignore the existing contract because only the new application is relevant.

A participating whole life policyowner asks to use a declared dividend to buy additional paid-up life insurance. Separately, the owner wants to know what happens if premiums stop after the policy has acquired value. Which statement correctly distinguishes the choices?

1. Using a dividend to buy paid-up additions is a dividend option; selecting extended term or reduced paid-up coverage is a nonforfeiture choice tied to stopping premiums.
2. Both choices are dividend options because both can affect policy value.
3. Both choices are nonforfeiture options because additional insurance is always a reduced paid-up policy.
4. A dividend can be used only to pay a loan and cannot purchase paid-up additions.

A person wants lifetime income but also wants a minimum number of payments to be made if death occurs soon after payments begin. Which payout description most directly fits that combination?

1. Life only, with no period guarantee.
2. Life with a period-certain guarantee, if offered by the contract.
3. A fixed period only, which guarantees income for the annuitant’s entire life.
4. A deferred annuity accumulation period, which itself guarantees a lifetime payout amount.

An agent advertises a policy by saying, “Your cash value is guaranteed to grow every year through dividends.” The policy is participating, but dividends are not guaranteed. Which concern is most direct?

1. The statement may mislead by presenting a non-guaranteed dividend as guaranteed.
2. The statement is acceptable because every participating policy pays the same dividend each year.
3. The only issue is whether the policy has a contingent beneficiary.
4. Advertising rules do not apply to statements made by an insurance agent.